New Zealand’s AML/CFT reform programme has reached another milestone, with the introduction of the Anti-Money Laundering and Countering Financing of Terrorism (Omnibus) Amendment Bill to Parliament.
The Bill builds on changes already introduced this year and proposes further amendments aimed at reducing unnecessary compliance work, making requirements more proportionate to risk, and strengthening measures to combat financial crime.
So, what’s being proposed and what could it mean for reporting entities?
A greater focus on risk
One of the main themes is giving reporting entities more flexibility to apply AML/CFT requirements according to the level of risk involved.
For example, the Bill proposes expanding the circumstances in which simplified customer due diligence (CDD) can be used, including where a reporting entity has reasonable grounds to assess a customer or transaction as low risk.
It also proposes changes to enhanced CDD requirements, including circumstances where completing additional checks could alert a customer to suspected suspicious activity.
For reporting entities, these changes could mean less time spent on unnecessary checks in lower-risk situations, while allowing more attention to be directed towards higher-risk activities.
Other changes on the horizon
The Bill also proposes changes in several other areas:
- Group arrangements. Replacing the designated business group framework with new mandatory and voluntary reporting group arrangements, changing how some businesses share and oversee AML/CFT responsibilities.
- Enforcement and penalties. Increasing penalties for certain breaches and introducing additional enforcement and investigative powers.
- Targeted financial sanctions. Introducing obligations for reporting entities to identify, assess and manage risks relating to specified sanctions.
- Virtual assets. Introducing restrictions on certain cash transactions involving virtual assets, with further details to be set through regulations.
These proposals reflect the wider direction of the reforms: reducing unnecessary compliance requirements while strengthening the regime’s ability to identify and respond to financial crime.
What happens next?
The Bill is still at an early stage and must progress through Parliament before becoming law. Its provisions may change during that process.
If enacted in its current form, the Bill would come into force one year after receiving Royal assent.
For now, reporting entities should continue to meet their existing AML/CFT obligations. There is no need to change processes based on these proposals.
However, it’s worth keeping an eye on the Bill’s progress, particularly where the proposed changes could affect customer due diligence, risk management, or other aspects of your AML/CFT programme.